IFC Exam Dumps - CSI Canadian Securities Course Questions and Answers

To ensure that retirement income projections maintain purchasing power, Michael must use the real rate of return, which adjusts investment returns for the effects of inflation. The Investment Funds in Canada text clearly distinguishes between nominal and real returns, stating that the nominal rate of return represents the stated or observed return on an investment, while the real rate of return reflects the true increase in purchasing power after inflation is taken into account.

Inflation reduces the amount of goods and services that a given dollar can buy over time. As a result, using nominal returns alone can significantly overstate the future value of an investment when planning for long-term goals such as retirement. The CIFC curriculum emphasizes that “investors are concerned with real returns because they measure the increase in purchasing power,” which is especially critical for retirement planning where income must sustain living standards over many years.

The annualized rate of return standardizes returns over multiple periods but does not automatically adjust for inflation. Similarly, the holding period return measures performance over a specific time frame without considering inflation’s impact. Neither method directly addresses purchasing power.

Therefore, because Michael’s objective is to maintain the real value of his retirement income, the real rate of return is the correct and most appropriate measure. This makes Option B the only answer that fully aligns with CIFC principles and retirement planning methodology.

Endowment bias leads investors to overvalue assets they own compared to similar assets they do not own. The feedback from the document states:

"People who are subject to endowment bias place more value on an asset they hold property rights to than on an asset they do not hold property rights to."

The market value of a perpetual preferred share is calculated by dividing the annual dividend by the yield of similar shares. Annual dividend = $0.25 × 4 = $1.00. Price = $1.00 / 0.035 = $28.57. The feedback from the document states:

"The current market value of a perpetual preferred share is calculated by dividing the annual dividend in dollars by the annual yield currently offered on preferred shares of a similar level of risk. In this case, the share would be valued as: ($0.25 × 4) / 0.035 = $28.57."

To fulfill the know your client (KYC) obligation, an advisor must collect and document information about the client’s personal and financial situation, investment objectives, risk tolerance, and investment knowledge. The KYC rule is a regulatory requirement that ensures that the advisor understands the client’s needs and goals, and provides suitable recommendations that match the client’s profile. In this case, Cosmo has provided some information about his personal and financial situation, such as his age, occupation, income, assets, and inheritance. He has also given some indication of his investment objectives, such as saving for retirement, and his investment knowledge, such as making his own investment decisions and preferring balanced funds. However, he has not disclosed his risk tolerance, which is his willingness and ability to accept fluctuations in the value of his investments. Risk tolerance is an important factor that affects the choice of investment strategies and products. Therefore, to complete the KYC process, the advisor needs to obtain additional information about Cosmo’s risk tolerance. References:

Canadian Investment Funds Course (CIFC) Study Guide, Chapter 1: The Investment Funds Industry, Section 1.4: The Know Your Client (KYC) Rule, page 1-111

Know Your Client (KYC) Definition - Investopedia2

A registered disability savings plan (RDSP) is a savings plan intended to help parents and others save for the long-term financial security of a person who is eligible for the disability tax credit (DTC). The DTC is a non-refundable tax credit that helps persons with disabilities or their supporting persons reduce the amount of income tax they may have to pay. To be eligible for the DTC, a person must have a severe and prolonged impairment in physical or mental functions, as defined by the Income Tax Act and as certified by a medical practitioner. Therefore, Alex must qualify for the DTC in order to be eligible for an RDSP. References: What is a registered disability savings plan (RDSP) - Canada.ca, Disability tax credit - Canada.ca

According to the Canadian Investment Funds Course, a stock exchange is a centralized and regulated market where securities of listed companies are traded between buyers and sellers. A stock exchange has strict listing requirements that companies must meet in order to be eligible for trading on the exchange. These requirements may include minimum capitalization, number of shareholders, financial reporting, corporate governance, and compliance with securities laws. A stock exchange also provides liquidity, transparency, and efficiency for the trading of securities.

An over-the-counter (OTC) market is a decentralized and unregulated market where securities that are not listed on a stock exchange are traded between dealers and brokers. An OTC market has no physical location, rather the trading is done through phone, email, or computer networks. An OTC market has lower listing requirements than a stock exchange, which makes it easier for smaller or newer companies to access capital. However, an OTC market also has less liquidity, transparency, and efficiency than a stock exchange.

Therefore, if Underground Airways Ltd. wants to take their privately owned corporation public through an initial public offering (IPO), they would have to weigh the pros and cons of listing on a stock exchange or the OTC market. One of the main considerations is that a stock exchange listing would provide them with greater market exposure and public confidence than listing on the OTC market. This is because a stock exchange listing signals that the company has met the high standards of the exchange and is subject to ongoing regulation and oversight. A stock exchange listing also attracts more investors, analysts, and media attention than an OTC listing. A stock exchange listing may also increase the value and liquidity of the company’s shares.

 1: Canadian Investment Funds Course - IFSE Institute 2 (Unit 5: Equity Securities)

Kerry’s taxable income would be $98,000 ($100,000 - $2,000). Using the federal tax rates provided in the image, the first $48,535 of her income would be taxed at 15%, the next $48,534 at 20.5%, and the remaining $931 at 26%. This would result in a total federal tax payable of $18,754. You can see the calculation in detail below:

Taxable Income

Marginal Tax Rate

Federal Tax Payable

$0 - $48,535

15%

$7,280.25

$48,536 - $97,069

20.5%

$9,934.47

$97,070 - $98,000

26%

$539.80

Total

$18,754.52

Note: The final answer is rounded to the closest whole dollar.

Canadian Investment Funds Course, Unit 8, Section 8.2; [4]

The current yield on a bond is the annual interest payment divided by the current market price of the bond. In this case, the annual interest payment is 7% of the face value, which is $700. The current market price of the bond is $9,230. Therefore, the current yield is:

9230700​×100%=7.58%

The current yield is different from the coupon rate, which is the annual interest payment divided by the face value of the bond. The coupon rate does not change over the life of the bond, but the current yield changes as the market price of the bond fluctuates. References:

Canadian Investment Funds Course (CIFC) Study Guide, Chapter 5: Fixed-Income Securities, Section 5.2: Bond Pricing and Yield, page 5-61

Current Yield Definition - Investopedia2

In a booming economy, equity growth mutual funds provide the best opportunity for capital gains. In a non-registered account, capital gains are the most tax-efficient form of income since only 50% is taxable.

Bonds, mortgages, and money market funds primarily generate interest income, which is fully taxable at the investor’s marginal rate.

Thus, the most tax-efficient choice is an equity growth fund.